KEEPING FAITH, MISSION AND HERITAGE IN TIMES OF CONSOLIDATION March - - PowerPoint PPT Presentation

B.C. Ziegler and Company | Member SIPC & FINRA

Stephen Johnson Managing Director sjohnson@Ziegler.com Chicago, IL Susan McDonough Catholic Elder Care & Post Acute Specialist smcdonough@Ziegler.com New York, NY PRESENTED BY ZIEGLER INVESTMENT BANKING | SPONSORSHIP TRANSITION March 6, 2019

KEEPING FAITH, MISSION AND HERITAGE IN TIMES OF CONSOLIDATION

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AGENDA

• SURPRISED BY OPPORTUNITY

SECTION 1

• KEEPING THE FAITH; HONORING THE PAST; SECURING THE FUTURE

SECTION 2

• PRACTICAL IDEAS & NEXT STEPS

SECTION 3

• A: CHARACTERISTICS OF PROACTIVE SENIOR LIVING ORGANIZATIONS
• B: SELECT SPONSORSHIP TRANSITION CASE STUDIES
• C: BIOGRAPHIES

EXHIBITS

B.C. Ziegler and Company | Member SIPC & FINRA

SECTION 1: SURPRISED BY OPPORTUNITY

Stephen Johnson Managing Director sjohnson@Ziegler.com Chicago, IL

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SPONSORSHIP TRANSITION SENIOR LIVING IN THE NEWS . . .

February 6, 2017

Record Number of Nonprofit Senior Living Transactions in 2016

February 6, 2017 by

Local retirement community joins with Ohio group

July 27, 2017

September 12, 2016

Lutheran and Mennonite retirement communities to merge Birch Hill Terrace to affiliate with RiverWoods

$6 million upgrade of Manchester retirement community to follow

March 23, 2016 May 13, 2015

‘New era’ as The Kenney finalizes Heritage Ministries affiliation

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SPONSORSHIP TRANSITION SENIOR LIVING CONSOLIDATION TRENDS

Approximately 380 Not-for-Profit communities changed sponsor/owner between 2010 and Mid2017

Source: Ziegler Investment Banking (9/1/17)

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SPONSORSHIP TRANSITION MISSION DRIVEN

• Fulfillment of Existing Mission

– Execution of the existing mission

• “we are have not reached everyone, there is more to do”
• Expansion of Mission

– Expanding the mission beyond or within a certain geographic scope

• Redefinition/Shift in Mission

– Organization views itself in a new light with a new purpose

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• Why called “Sponsorship?”
• Regardless of how change is structured – affiliation, acquisition,

merger, joint venture – the sponsorship changes

• The term better reflects the complex process which goes far beyond a

“transaction”

• Strategic decision process results in a stronger mission for future for

both organizations. Asking the question is strategic.

SPONSORSHIP TRANSITION A STRATEGIC PROCESS

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• Allows for greater strength of mission
• Greater ability to generate economies
• f scale
• Create depth of leadership in case of

CEO and executive leadership succession

• Attract better talent & leadership

– Greater ability to pursue passions – Growth provides invigorating challenges; diversion from status quo – Compensation and benefits options increase with growth

• Improved access to capital
• Diversification in services insures long-term financial stability
• Greater ability to expand into underserved markets
• Additional programs and services enhance current customer experience

SPONSORSHIP TRANSITION CONSIDERATIONS

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SPONSORSHIP TRANSITION DEFINED

“Affiliation”

• In law, affiliation is the term to describe a relationship between two or

more parties

• Stated simply, 2 stay 2 (although 1 generally “controls” both)
• Control is in the form of restructured Articles of Incorporation & Bylaws

and a management contract As Opposed to “Merger” or “Acquisition”

• In law, merger is the term to describe the combining of 2 or more

companies into one

• Stated simply, 2 become 1
• In an acquisition, one entity generally acquires the assets of another

entity and either combines them with their own or places them in another entity

*Definition courtesy of Glenn Fox, Esq. of Saul Ewing

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2018 LZ 200 GROWTH OF COMBINED UNIT MIX

Source: Preliminary 2018 LeadingAge Ziegler 150 Publication (Data as of 12/31/17)

10,000 20,000 30,000 40,000 50,000 60,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Units Year

MA Total New Campus Total

FROM 1990

BY AFFILIATIONS, MERGERS & ACQUISITIONS AND NEW CAMPUS GROWTH

Projected Growth 2018 - 2019

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SPONSORSHIP TRANSITIONS NFP CUMULATIVE DATA

29 41 63 97 149 204 264 320 385 36 51 75 111 174 254 345 405 568 100 200 300 400 500 600 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cumulative Totals (2010-YE 2018) by # of Transactions & # of Communities Transactions Market-Rate Communities

Note: Includes market-rate communities; excludes government subsidized Source: Ziegler Investment Banking 12/31/2018

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SENIOR LIVING CONSOLIDATION TRENDS MARKET DRIVERS

Complexities

• f Healthcare

1990 2000 2010 Influence

Leadership Turnover Technology Demands

Diversify Service Lines Hospital Consolidation

Ability to Attract & Retain Talent

Complexities

• f Healthcare

Leadership Turnover Technology Demands

Diversify Service Lines Hospital Consolidation Ability to Attract Talent

Technology Demands

Hospital Consolidation Ability to Attract Talent

Financial Pressure Financial Pressure

Access to Capital Access to Capital Access to Capital

Financial Pressure Leadership Turnover

Complexities

• f Healthcare

Access to Capital

Reinvestment Requirements Reinvestment Requirements Competition Competition Competition

TODAY

Growth Capital

Complexities of Healthcare

• Occupancy

pressures

• Competition
• Higher pt. acuity
• Negative revenue

impact Leadership Turnover

• As Boomer CEOs

retire, can serve as catalyst to explore affiliation

• CEO recruitment

challenge for smaller

• rganizations

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Complexities of Healthcare Ability to Attract Talent/Workforce Management

Source: Ziegler Investment Banking

• Needed large-scale visibility in local market
• Greater market power w/ consolidation
• Healthcare consolidation elevating sophistication
• f local hospitals/health systems
• Need to invest in EHR/EMR platforms
• Need large-scale branding to facilitate

recruitment

• Scale leads to greater professional development
• pportunities
• Growth in for-profits leading to greater

competition for staff

SENIOR LIVING CONSOLIDATION TRENDS MARKET DRIVERS

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Driver Definition

Complexities of Healthcare Service delivery complexity has increased. Bundled payments, HIPPA, regulatory environment, managed care pressure, star ratings Leadership Turnover Largely CEO turnover, but greater influence when no clear successor among C-suite team. Retirement of the Boomers. Technology Demands Used to be just enterprise-related technologies, then healthcare-related, now consumer technologies are an added element Financial Pressure Includes occupancy-related as well as exposure related. Higher expenses, liability, personnel & benefits. Competition For-profit competition, consumer choice is greater than ever Reinvestment Requirements The need to devote capital to campus reinvestment and repositioning Access to Capital Greater scale generally means greater access to capital for growth Hospital Consolidation Hospitals growing into regional systems looking for regional partners Diversification of Business Lines Ability to expand service lines (affordable housing, HCBS, etc.) Attracting Talent/ Workforce Management Strong leaders are looking for upward mobility and professional development

• pportunities. Competitive compensation packages.

Growth Capital Investment requirements; planning for future growth

SENIOR LIVING CONSOLIDATION TRENDS MARKET DRIVERS

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Very Large Metro 5,000,000+ Large Metro 2,500,000+ Medium Metro 1,000,000+

Small Metro 500,000+

Sub-Metro 250,000+ Exurban 100,000+ Rural

SENIOR LIVING MARKET CONSOLIDATION TRENDS MARKET DRIVERS

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SPONSORSHIP TRANSITION STRUCTURE ALTERNATIVES

Sponsor (Member) Transfer Collaborations

Low High Low High

Risk / Benefit

Asset Transfer

B.C. Ziegler and Company | Member SIPC & FINRA

SECTION 2: KEEPING THE FAITH; HONORING THE PAST; SECURING THE FUTURE

Susan McDonough Catholic Elder Care & Post Acute Specialist smcdonough@Ziegler.com New York, NY

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• Entered into as intentional strategic consideration
• Outcome of a thoughtful and intentional process –

with adequate transition plans

• Resources of sponsor align with organization
• The joining organization is acknowledged for the contribution it will be

making to the new sponsorship organization such as a new service line.

• The sponsorship “feels” much more like a partnership approach to

meet environmental challenges such as health care reform, changing market expectations and regulations.

• Opportunities to expand mission are greater together.

SPONSORSHIP TRANSITION DEFINING THE OPPORTUNITY INTEGRATION

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• Across the past five years, 80% of the NFP to NFP sponsorship

transitions have been among faith-based providers – 52% were with another faith-based organization (may/may not be within the same denomination) – 20% of those within the same faith/denomination

• Catholic-sponsored entities are under increased pressure

– Generally larger proportion of healthcare beds – Shrinking number of sisters and aging congregations

Source: Ziegler Investment Banking, 4/1/18

SPONSORSHIP TRANSITION THE ROLE OF FAITH & VALUES

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RESPONSIBILITIES DIFFER DEPENDING ON ORGANIZATIONS’ POSITIONS

• One acquires the other

– Acquirer vs. Acquired

• Merger of equals
• Loose affiliations and Management Contracts
• Other unique arrangements

Preserving and protecting mission, faith and heritage maybe as important to future success as strategy and business operations

• Both organizations’ needs need to be factored in!

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WHEN YOUR ORGANIZATION IS THE ACQUIRER/STRONGER “PARTNER”

• Obviously more control
• Tone sets future success
• No one wants to have mission/religious identity/values/heritage

extinguished or feel like the “poor sister” in the relationship

• Doing your homework on the other organization is very important
• Gather all information on what is “important” to the new organization

– Don’t forget artwork, religious symbols, food, special celebrations, historic mission commitment in the community

• Find Common Ground – Use Creativity
• Keep your promises – assign responsibility to oversee implementation
• Communicate/communicate/communicate to various interested groups

at appropriate times and throughout the process

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WHEN YOUR ORGANIZATION IS THE ACQUIRED/“WEAKER” PARTNER

• Do your due diligence on your potential partners
• Document what is important to your organization from different

perspectives e.g. Board, Historic Sponsors, Clients, Community – Communicate during due diligence phase – In written documents – Expectations of Preservation of Mission/Faith/History

• Who, when, how, what
• Who/how to monitor implementation of promises
• Expectations of communications with historic

sponsors/Board/etc.

• How this is framed in public communications is very important

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MARRIAGE OR MERGER OF EQUALS

• Both Parties Need to Know what is important to Preserve and how new

mission will be expressed

• Determine who will be responsible for implementing
• Expectation of these issues should be written into the documents
• Same issues related to communications

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LOOSE RELATIONSHIPS – AFFILIATIONS/MANAGEMENT CONTRACTS

• Is this just a business relationship or a “date” for a more formal relationship?
• Assuming you are the one, with whom the relationship is being sought by others

– What do they want to realize from the relationship

• Example: Two different religious not for profit organizations coming together to

take advantage of scale, expertise, other benefits

• Never going to merge
• Wanted access to expertise, services, group purchasing, etc.
• Catholic System as a host to a Kosher, Jewish SNF

– SNF participated in Mission Committee – Just wages, care for the dying, advocacy for the uninsured

• Group Purchasing
• Innovative Activities – such as bundled payments
• No change – both had deep faith commitments: Catholic ethicist/Rabbi met to

discuss common ground

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UNIQUE ARRANGEMENTS: ST. ANDREWS RESOURCES FOR SENIOR SYSTEMS

#1 Managing Sarah Community for 5 different Catholic organizations #2 Created a unique relationship – three parties: St. Andrews/St. Francis

• Home. One congregation of Sisters accepted a transfer of sponsorship

from a congregation of Men, and then created a relationship with St. Andrews to oversee all operations.

• Two different sets of reserve powers – enough to preserve Catholic

identity of the facility and sufficient control of organization to allow St. Andrews to invest and operate the facility

• In some ways, unique to the Catholic groups and various “permissions”

which must be granted to transfer sponsorship

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RECOMMENDATIONS

If you are the “stronger” partner:

• Respect and support the mission, history and religious identity of the
• ther organization.
• Be intentional about understanding what is important to be successful
• Be willing to write into document with specifics.
• Designate a point person
• Keep your promises
• Communicate, communicate, communicate at appropriate times and

throughout the process

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RECOMMENDATIONS

If you are not the stronger partner

• Do your due diligence about who you select as a partner
• Write expectations into the documents

– Limit the number of “Trust MEs” – personnel do change/retire

• Have an initial way to monitor
• Be positive in communications – you want this to be a success and be

mindful of the message!

• Expect that there will be changes – no one will do it exactly as you did.
• Mark the transition formally and in a positive way

B.C. Ziegler and Company | Member SIPC & FINRA

SECTION 3: PRACTICAL IDEAS & NEXT STEPS

Stephen Johnson Managing Director sjohnson@Ziegler.com Chicago, IL Susan McDonough Catholic Elder Care & Post Acute Specialist smcdonough@Ziegler.com New York, NY

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Source: Ziegler Investment Banking

Scenario Yes or No for your Organization? Do we have a clear plan of succession for the pending retirement of our long- time CEO to ensure strength moving forward? (if applicable) YES NO Do we have the resources needed to bring an aging physical plant up to par for current and future residents? YES NO Are we knowledgeable enough and strong enough to be able to compete in the rapidly changing healthcare environment? YES NO Are we in a position of financial strength where we would be a strong candidate for borrowing capital? YES NO Do we have the expertise and resources to keep up with the technological needs of the organization? YES NO Is our size and scope of services large enough to be a provider with influence and power in our local/regional market? YES NO Are we among the top one or two leaders in our primary market area? YES NO Do we have strong occupancy and a flow of prospective residents interested in

• ur community?

YES NO Do we have confidence in our ability to fulfill payment of our debt obligations in the short- and mid-term? YES NO If we were to grow organically on our own, are we confident we would be successful? YES NO

FINDING THE RIGHT PARTNER STARTS WITH ASKING THE RIGHT QUESTIONS

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Criteria Priority Ranking: Ideal Ranking: Manageable Ranking: Challenge Not able to consider Mission Service Continuum Expansion Accretive to organization Physical Plant: Age and condition Reputation Financial Strength Model of Service delivery Size of Campus Ability to Expand

Purpose: Agreed upon criteria and ranking will be used to assess sponsorship opportunities which Wesley may consider while continuing to implement its strategic growth plan.

FINDING THE RIGHT PARTNER DEFINING WHAT MATTERS

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FINDING THE RIGHT PARTNER DEFINING WHAT MATTERS

Criteria Priority Ranking: Ideal Ranking: Manageable Ranking: Challenge Not able to consider Debt Service Coverage Days Cash on Hand Location Information Technology Board integration expectations Executive Talent Other

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• Approach should be targeted
• Approach is relational

– May be along affinity – May be along faith – May be along service lines: compatible or desired

• Plan for a longer timeline
• Be clear on benefit
• Be clear on flexibility around Board structure, identity and

independence

• Careful consideration when entering a new state. Nuances and
• pportunities. Ability to create strength within state.

FINDING THE RIGHT PARTNER STRATEGIC MAPPING OF CANDIDATES

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FINDING THE RIGHT PARTNER AFFILIATION ADVISORY SERVICES

Criteria Letter of Interest Letter of Intent

Top Choice

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RECENT NFP LPC SPONSORSHIP TRANSITIONS 2017 & 2018 EXAMPLES

Year Organization New Sponsor FP/NFP State

2018 Meadows at Mercy Creek – Meadows Mennonite Retirement Community Franciscan Ministries of Chicago, IL NFP to NFP IL 2018 Longhorn Village Brazos Presbyterian NFP to NFP TX 2018 Arbor Glen Life Care Services (LCS) NFP to FP NJ 2018 Covenant Place of Lenexa – Covenant Retirement Communities Scenic Development NFP to FP KS 2018

• St. Joseph’s John Knox Tampa Bay – Bay

Care Health System Concordia Lutheran Ministries NFP to NFP FL 2018 Jewish Geriatric Services Chelsea Jewish Lifecare NFP to NFP MA 2018 The Evergreens Acts Retirement-Life Communities NFP to NFP NJ 2018 Augustana & Elim Care NFP to NFP MN 2017 Pisgah Valley Liberty Healthcare NFP to FP NC 2017 Laurel Crest Presbyterian Communities of SC NFP to NFP SC 2017 Asbury Heights UPMC Senior Communities NFP to NFP PA 2017 Westminster Village Acts Retirement-Life Communities NFP to NFP AL 2017 Cadbury at Lewes Springpoint Senior Living NFP to NFP NJ 2017 Eastmont Towers Transforming Age NFP to NFP NE 2017 Friendship Village of Chesterfield & Friendship Village of South Hills NFP to NFP MO 2017 Hearthstone Communities Heritage Ministries NFP to NFP IL

Source: Ziegler Investment Banking, 8/30/18

B.C. Ziegler and Company | Member SIPC & FINRA

EXHIBIT A: CHARACTERISTICS OF PROACTIVE SENIOR LIVING ORGANIZATIONS

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What are proactive single-site organizations doing?

• Investing in current physical plant
• Ensuring strong occupancy through a firm commitment to marketing and

sales

• Fully understanding the supply and demand characteristics of the local

market

• Strong commitment to operations while at the same time, planning for future

growth

• Making sure that brand, identity, mission and values are clear and known to

all stakeholders (internal and external)

• Exploring partnerships, where it makes sense to do so

CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

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CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

Characteristic Description Visionary Being a trendsetter, innovative, thought-leader Not afraid to fail at new ventures; appropriate risk tolerance Gaining information and insights from other industries/walks

• f life

Discomfort with the status quo Embraces partners for mutual gain Embraces Organization’s Mission in thought and decision- making Board that operates at a generative level Clarity of identify and strategic direction

Source: Ziegler Investment Banking, 2017

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CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

Characteristic Description Relentless Pursuit of Quality of Experience for Residents Person-centered care Cutting-edge common and living areas Commitment to consistently reinvest in physical plant Technology used where beneficial to resident experience Culture that embraces and promotes wellness and healthy living Commitment to Disclosure to Residents Services easy to access and understand Method for gaining resident feedback and evaluation of performance

Source: Ziegler Investment Banking, 2017

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CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

Characteristic Description Continually Attracting and Retaining Quality Team Members Innovation/learning central in approach Quality communication patterns and practices Succession planning from board to mid-level management team Inclusive environment where ideas are valued Team approach Robust staff training and professional development Staff are involved and understand direction of organization Growth orientation that will attract high-level talent

Source: Ziegler Investment Banking, 2017

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CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

Characteristic Description Preparing for a Changing Healthcare Marketplace Significant investment in IT – outcomes tracking Strategic updates to offerings/physical plant in healthcare Creating opportunities with other partners – joint ventures Ability and scale to engage in payment reform initiatives (ACOs, bundles, etc.) Organizational name – branded within target markets Commitment to data analytics and outcomes Hiring of specialized staff to navigate complexity

Source: Ziegler Investment Banking, 2017

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CHARACTERISTICS OF TODAY’S PROACTIVE SENIOR LIVING ORGANIZATION

Characteristic Description Growth Orientation Maximizing existing real estate assets Expansions/repositioning of aging offerings Considering affiliation, acquisitions Deep understanding of needs and tendencies of target markets Expansion into diverse, but related services and business lines Effective planning for growth needs (e.g. financial capital, human capital) Sophisticated corporate structure that facilitates growth Alignment of strategic growth goals and allocation of resources

Source: Ziegler Investment Banking, 2017

B.C. Ziegler and Company | Member SIPC & FINRA

EXHIBIT B: SELECT SPONSORSHIP TRANSITION CASE STUDIES

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• Location: Eldersburg, MD
• Type: Multi-site organization

– 4 Communities

• Size1: 1,137 market-rate units
• Revenue2: $84,000,000
• Driver: Upcoming retirement of CEO;

recognition of value of being part of a larger system

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2019 – IN PROCESS

• Process: The board and executive leadership of Integrace conducted a national search over a roughly two-year period

and selected Acts. Retiring CEO at Integrace as well as recognizing the value of being part of a larger organization.

• Result: The Evergreens board narrowed down the list of potential candidates and felt that an affiliation with Acts

Retirement-Life Communities was the best fit for their needs moving forward. Affiliation official January 2019.

1 2018 LeadingAge Ziegler 200; Affiliation press release 2 Some revenue figures obtained from GuideStar and LeadingAge Ziegler 200; figures rounded. Figures are prior to affiliation

• Location: West Point, PA
• Type: National multi-site organization

– 22 LPCs

• Size1: 8,370 market-rate units
• Revenue2: $448,000,000
• Driver: Growth through multi-site

affiliation; continued expansion in MD where already had an existing community

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• Location: Tampa, FL
• Type: Health-system sponsored entity
• Size1: 580 market-rate units
• Revenue: Unknown
• Driver: Health system looking to transition

community to senior living provider; some

• perating challenges

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2018

• Process: The health system that sponsored St. Joseph’s John Knox Tampa Bay was looking to dispose of the

community to another senior living provider.

• Result: Concordia was the organization selected by Baycare. Affiliation closed spring of 2018 with St. Joseph’s John

Knox joining Concordia Lutheran Ministries.

1 2017 LeadingAge Ziegler 150; Affiliation press release 2 Some revenue figures obtained from GuideStar and LeadingAge Ziegler 150; figures rounded. Figures are prior to affiliation

• Location: Cabot, PA
• Type: National multi-site organization

– 5 LPCs – Significant HCBS platform

• Size1: 1,898 market-rate units
• Revenue2: $175,800,000
• Driver: Growth in a new state

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• Location: Minneapolis, MN
• Type: Multi-site organization

– 22 communities

• Size1: 2,102 market-rate units
• Revenue2: $116,000,000
• Driver: Retirements among C-suite

executives; competitive MN healthcare environment

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2018

• Process: Multi-phased process where parent company created, but both operated as separate organizations; Co-CEOs

for a period of time, and Elim Care separated from the church. A number of drivers present, including retiring C-suite executives, competitive MN environment, both organizations with heavy healthcare exposure and long history of knowing

• ne another from same market.
• Result: As of July 1, 2018, both organizations officially merged and Bob Dahl, CEO of Elim Care, became the CEO for

the parent organization. Tim Tucker (Augustana) to retire and become CEO Emeritus.

1 2017 LeadingAge Ziegler 150 2 Some revenue figures obtained from GuideStar and LeadingAge Ziegler 150; figures rounded. Figures are prior to affiliation

• Location: Eden Prairie, MN
• Type: National multi-site organization

– 26 communities

• Size1: 1,697 market-rate units
• Revenue2: $133,000,000
• Driver: Competitive MN healthcare

environment; growth of existing platform

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• Location: Sellersville, PA
• Type: Single-site organization
• Size1: 349 market-rate units
• Revenue2: $20,400,000
• Driver: Desire to grow; create more

scale and be competitive in changing healthcare landscape

• Process: The two organizations had preliminary conversations across roughly an 18-month period.
• Result: The two will affiliate and create a new parent corporation, governed by a Board of Directors

comprised of individuals from each community’s existing board members.

1 Affiliation press release 2 Revenue obtained from GuideStar; figures rounded; Revenue figures are prior to affiliation.

• Location: Telford, PA
• Type: Single-site organization
• Size1: 542 market-rate units
• Revenue2: $24,300,000
• Driver: Desire to grow; create more

scale and be competitive in changing healthcare landscape

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2017

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• Location: Maryville, TN
• Type: Small multi-site organization

– 2 LPCs

• Size1: 547 market-rate units
• Revenue2: $32,000,000
• Driver: Leadership team recognized

benefit of being affiliated with a larger

• rganization for long-term sustainability
• Process: Asbury Communities was existing manager. Asbury Place leadership spent time in recent

years discussing benefits of affiliation and educated board on trends. Two organizations pursued full affiliation.

• Result: Asbury Place became affiliate of Asbury Communities.

1 2016 LeadingAge Ziegler 150 2 Revenue obtained from 2016 LZ 150 submission as well as GuideStar; figures rounded; Figures are prior to affiliation.

• Location: Germantown, MD
• Type: Multi-site organization

– 6 LPCs – 1 Nursing Home

• Size1: 1,932 market-rate units
• Revenue2: $196,000,000
• Driver: Continued growth of national

platform; expand on existing relationship

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2016

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• Location: Ann Arbor, MI
• Type: Single-site organization

– 1 LPC

• Size1: 416 market-rate units
• Revenue2: $39,000,000
• Driver: Succession planning for CEO;

recognized need for scale in competitive healthcare market

• Process: The organization had discussed possibilities of affiliation alongside of succession planning.

Existing relationships were in place with Trinity (strong referral partner) and talks between the two

• rganizations ensued.
• Result: Glacier Hills became an affiliate of Trinity Health Senior Communities.

1 2016 LeadingAge Ziegler 150 2 Revenue obtained from 2016 LZ 150 submission as well as GuideStar; figures rounded; Figures are prior to affiliation.

• Location: Livonia, MI
• Type: Multi-site organization

– 20 market-rate communities – 7 Affordable Housing communities – Extensive HCBS

• Size1: 3,745 market-rate units
• Revenue2: $300,000,000
• Driver: Continued growth of national

platform; heavy catchment area for Trinity Health

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2016

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• Location: Florham Park, NJ
• Type: Single-site organization

– 1 Nursing Home

• Size1: 101 market-rate units
• Revenue2: Unknown
• Driver: Long-term stability; Feeling

financial pressures and declining membership among congregation

• Process: The organization conducted a search for a new partner and LSMNJ was selected as the best fit.
• Result: The Sisters of Charity, the sponsor of Saint Anne Villa, transferred ownership to LSMNJ.

Renamed Villa at Florham Park. The Sisters of Charity will continue to live and be cared for at The Villa at Florham Park.

1 2016 LeadingAge Ziegler 150 2 Revenue obtained from 2016 LZ 150 submission as well as GuideStar; figures rounded; Figures are prior to affiliation.

• Location: Burlington, NJ
• Type: Multi-site organization

– 1 LPC – 1 Nursing Home – 6 Affordable Housing – PACE program

• Size1: 678 market-rate units
• Revenue2: $75,000,000
• Driver: Growth of statewide platform

Saint Anne Villa SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2016

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• Location: Frankfort, IN
• Type: Single-site organization
• Size1: 375 market-rate units
• Revenue2: $7,800,000
• Driver: Looking to affiliate and be part of

a larger organization

• Process: Organizations familiar with one another due to proximity in the state; Wesley Manor was

feeling impact of economic downturn and 2012 refinancing; Management and board began to explore affiliation opportunities.

• Result: Wesley Manor becomes an affiliate of BHI Senior Living.

1 Affiliation press release 2 Revenue obtained from GuideStar and LeadingAge Ziegler 150; figures rounded; Figures are prior to affiliation.

• Location: Zionsville, IN
• Type: Multi-site organization

– 3 LPCs – 2 Affordable Housing

• Size1: 1,179 market-rate units
• Revenue2: $52,000,000
• Driver: Growth of statewide network and
• ngoing mission expansion

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2015

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• Location: Goshen, IN
• Type: Multi-site organization

– 6 LPCs – 2 Affordable Housing

• Size1: 1,409 market-rate units

352 affordable units

• Revenue2: $65,000,000
• Driver: Looking to expand regional

platform.

• Process: Two organizations had known one another for a number of years. Christian Ministries CEO

introduced affiliation concept to the board as part of succession planning.

• Result: Golden Years and Great Lakes affiliated with Greencroft Communities. Christian Ministries

CEO retired.

1 2015 LeadingAge Ziegler 150 2 Revenue obtained from 2015 LZ 150 submission; figures rounded; Revenue figures are prior to affiliation. 3Revenue obtained from IRS 990

• Location: Fort Wayne, IN
• Type: Multi-site organization

– 2 LPCs

• Size1: 350 market-rate units
• Revenue3: $10,000,000
• Driver: Pending retirement of CEO.

Board recognizing need to affiliate and increasing complexity of business.

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2015

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• Location: Oakmont, PA
• Type: Multi-site organization

– 3 LPCs – 22 Affordable Housing

• Size1: 1,114 market-rate units

999 affordable units

• Revenue2: $128,100,000
• Driver: Continued growth in Western

PA.

• Process: Had known one another for a number of years, given regional presence. Leadership explored
• ptions and brought to the board for due diligence and approval.
• Result: Presbyterian Homes of Lake Erie now a part of Presbyterian SeniorCare.
• Location: Erie, PA
• Type: Multi-site organization

– 3 LPCs

• Size1: 322 market-rate units
• Revenue3: $22,500,000
• Driver: Join larger regional system to

ensure future success.

1 2015 LeadingAge Ziegler 150 2 Revenue obtained from 2015 LZ 150 submission; figures rounded; Revenue figures are prior to affiliation. 3Revenue obtained from IRS 990

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2015

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• Location: Greensboro, NC
• Type: Multi-site organization

– 2 LPCs

• Size1: 577 market-rate units
• Revenue2: $24,000,000
• Driver: Succession planning, growth of

regional platform

• Process3: Extensive process to increase awareness of respective organizations and to build trust.

Participation in respective organizations’ board meetings. Next step is board approvals for extension of letter of intent and draft of definitive agreement.

• Result: The two organizations will combine through a formal affiliation.

1 2014 LeadingAge Ziegler 150 2 Revenue obtained from 2014 LZ 150 submission; figures rounded to the nearest millionth; Revenue figures are prior to affiliation. 3Ziegler Investment Banking, Sponsorship Transitions Practice

• Location: High Point, NC
• Type: Multi-site organization

– 3 LPCs

• Size1: 958 market-rate units
• Revenue2: $53,000,000
• Driver: Growth of regional platform

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: FORMAL MANAGEMENT AGREEMENT W/ AFFILIATION REVIEW

54

• Location: Rockford, IL
• Type: Single-site organization

– Continuing Care Retirement Community

• Size1: 134 market-rate units
• Revenue2: $3,000,000
• Driver: Sponsor (Lutheran Social

Services of Illinois) sought a new NFP sponsor to allow full-focus on social service ministry.

• Process: LSSI identified a few select providers which fit their mission and geographic criteria.
• Result: Wesley Willows selected as the new sponsor of Peterson Meadows.

1 Ziegler Investment Banking; Sponsorship Transitions Practice 2 Revenue obtained from IRS 990 forms; figures rounded to the nearest millionth; Revenue figures are prior to affiliation.

• Location: Rockford, IL
• Type: Single-site organization

– Continuing Care Retirement Community

• Size1: 517 market-rate units
• Revenue2: $7,000,000
• Driver: Expansion into a multi-site
• rganization.

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2013

55

• Location: Clarence Center, NY
• Type: Single-site organization

– Independent Living Community

• Size2: 62 market-rate units
• Revenue2: $2,000,000
• Driver: Declining occupancy and

challenges to debt service obligations.

• Process: Board of Vinecroft pursued new sponsor as part of a forbearance agreement with lender.
• Result: Heritage Ministries was selected as the new sponsor of Vinecroft.

1 2014 LeadingAge Ziegler 150 2 Ziegler Investment Banking; Sponsorship Transitions Practice

• Location: Gerry, NY
• Type: Multi-site organization

– 3 IL Communities – 2 AL Communities – 3 Nursing Homes

• Size1: 624 market-rate units
• Revenue1: $38,000,000
• Driver: Growth of regional platform

SENIOR LIVING SPONSORSHIP TRANSITIONS CASE STUDIES

YEAR: 2013

B.C. Ziegler and Company | Member SIPC & FINRA

EXHIBIT C: BIOGRAPHIES

57

Stephen Johnson is a Managing Director and leader of the Senior Living Sponsorship Transition Advisory Practice at Ziegler in Chicago. Since joining the firm in 1999, Steve has senior managed or co-senior managed more than 80 public debt offerings – raising more than $4 billion through a variety of diverse capital structures. His current focus is advising not-for-profit providers on growth through strategic initiatives including affiliations, mergers and joint ventures. In all of these activities, he has become a leading authority

• n the metro-Chicago senior living marketplace.

Previously, Steve served as executive director of one of the nation’s premiere senior living

• rganizations, Willow Valley Retirement Communities and as an associate with a leading venture

firm in the Silicon Valley of northern California. There, he participated in raising and managing private equity in the United States and Japan. Steve received a M.B.A. from Northwestern University’s Kellogg Graduate School of Management, Evanston, IL and a B.A. from Wheaton College, Wheaton, IL. He is a member of the President’s Club of the Chicago Council on Global Affairs and a third generation Cubs fan.

STEPHEN W. JOHNSON Managing Director Sponsorship Transition Advisory Practice sjohnson@ziegler.com One North Wacker Drive Suite 2000 Chicago, IL 60606 P: 312 596 1512 F: 312 263 5217 M: 312 208 2465 www.Ziegler.com

ZIEGLER INVESTMENT BANKING

58

Susan McDonough joined the senior living team at Ziegler in 2016. As a special consultant for Catholic Elder Care and Post Acute issues, she is providing strategy advice to Ziegler’s clients, while also working to promote a sustainable future for Catholic elder care services. From 1996 until 2016, Susan was the vice president, Strategy & System Development for Covenant Health in Massachusetts. In this position, she was responsible for creating system-wide strategy and new business development. Susan provided strategic planning,

• versaw advocacy and communication efforts, analyzed new business and acquisition
• pportunities, supported operational improvement initiatives and directed start-up

management and operational support services to both acute and elder care programs. She directed Covenant’s consulting services congregations, dioceses, and other not-for-profit

• rganizations. Over the course of her career, she was a principal with the firm Lanzikos,

McDonough & Associates, a Boston-based management consulting firm specializing in elder care. She has also served as the State Long Term Care Ombudsman for the Commonwealth of Massachusetts. Susan serves and has served as a board member for a wide range of organizations including Presence Health, in Chicago, IL, LeadingAge, Washington DC, the Catholic Health Association of the United States, the Massachusetts Alzheimer’s Association, LeadingAge Massachusetts and several skilled nursing, assisted living and elder care campuses, including Seashore Point in Provincetown, MA, a member organization of Deaconess Abundant Life Communities. She is a frequent speaker on health and elder care issues. Susan is licensed as both a Nursing Home Administrator and Social Worker and is a Fellow of the American College of Healthcare Executives. SUSAN MCDONOUGH, FACHE, NHA Catholic Elder Care & Post Acute Specialist smcdonough@ziegler.com 140 East 45th Street 22nd Floor New York, NY 10017 P: 212 284 5416 F: 212 730 1095 www.Ziegler.com

ZIEGLER CATHOLIC HEALTHCARE

59

• 1. The information contained herein is intended to be general, factual, and educational in nature, and does not reflect any

assumptions, opinions, or views of B.C. Ziegler and Company (Ziegler) with respect to the recipient municipal entity’s or obligated person’s particular situation. Further, a) Ziegler is not recommending an action to the municipal entity or obligated person; b) Ziegler is not acting as an advisor to the municipal entity or obligated person and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to the municipal entity or obligated person with respect to the information and material contained in this communication; c) Ziegler is acting for its own interests; and d) The municipal entity or obligated person should discuss any information and material contained in this communication with any and all internal or external advisors and experts that the municipal entity or obligated person deems appropriate before acting on this information or material.

• 2. B.C. Ziegler and Company (Ziegler) seeks to serve as an underwriter on a future transaction and not as a financial advisor or

municipal advisor. The information provided is for discussion purposes only in anticipation of being engaged to serve as underwriter.

DISCLAIMER